Download MPRA Gender equity and globalization: Macroeconomic policy for developing countries

M PRA
Munich Personal RePEc Archive
Gender equity and globalization:
Macroeconomic policy for developing
countries
Stephanie Seguino and Caren Grown
University of Vermont, Levy Economics Institute
2006
Online at http://mpra.ub.uni-muenchen.de/6540/
MPRA Paper No. 6540, posted 8. January 2008 08:41 UTC
GENDER EQUITY AND GLOBALIZATION: MACROECONOMIC POLICY FOR
DEVELOPING COUNTRIES
Stephanie Seguino*
Department of Economics
Old Mill 227
University of Vermont
Burlington, VT 05405
Tel. 802 656-0187
[email protected]
and
Caren Grown
Levy Economics Institute
Bard College
Blithewood
Annandale-on-Hudson, New York 12504
845-758-7738
December 2005
Acknowledgements: We are grateful to a number of people who have given us insightful
comments and raised challenging questions about earlier versions of this paper. In
particular, we thank Ajit Singh, Korkut Erturk, Maria Floro, Will Milberg, Marianne
Ferber, Elissa Braunstein, and participants in the symposium ‘New Directions in
Research on Gender-Aware Macroeconomics and International Economics’ in April 2002
at the Jerome Levy Economics Institute.
This is a working paper. The final version of this paper was published under the same
title in 2006 in Journal of International Development 18: 1-24.
* Corresponding author
GENDER EQUITY AND GLOBALIZATION: MACROECONOMIC POLICY FOR
DEVELOPING COUNTRIES
Abstract
This paper reviews the evidence of gender effects of globalization in developing
economies. It then outlines a set of macroeconomic and trade policies to promote gender
equity in the distribution of resources. The evidence suggests that while liberalization has
expanded women’s access to employment, the long-term goal of transforming gender
inequalities remains unmet and appears unattainable without regulation of capital, and a
reorientation and expansion of the state’s role in funding public goods and providing s a
social safety net. This paper sets forth some general principles that can produce greater
gender equality, premised on shifting economies from profit-led, export-oriented to
wage-led, full-employment economies. The framework is Kaleckian in its focus on the
relationship between the gender distribution of income and macroeconomic outcomes.
JEL Codes:
F4 Macroeconomic Aspects of International Trade and Finance
J2 Economics of Gender
O11 Macroeconomic Analysis of Economic Development
O2 Development Planning and Policy
Keywords: gender, income distribution, well-being, industrial policy, foreign direct
investment, trade, macroeconomic policy.
GENDER EQUITY AND GLOBALIZATION: MACROECONOMIC POLICY FOR
DEVELOPING COUNTRIES
1. INTRODUCTION
Over the last two decades, a number of development economists have critically
assessed mainstream trade and growth strategies, propelled by a concern with persistent
gender inequality. That body of work explores the linkages between macro-level policies
and the gender distribution of resources and responsibilities at the micro-level. Research
underscores that macro-level policies can hinder or help achieve gender equity, and that
gender inequities, in turn, can promote or hamper the attainment of macroeconomic
objectives. There is thus a two-way causality between macroeconomic variables and
gender equity.
This paper reviews that research, drawing attention to insights that can inform
strategies for shaping macro policy in a way that enables gender equity. This is followed
by an effort to outline the broad contours of gender-equitable macroeconomic policy.
This is a difficult task, given wide variations in types of economies, institutional
mechanisms, and cultural forces that reinforce gender inequalities. Nonetheless, there are
some generalizable approaches alongside more specific policy proposals for countries at
different levels of development.
Briefly summarizing the conclusions of this paper, to achieve the combined goals
of improving women’s relative well-being and promoting economic growth requires
policies that can shift a ‘profit-led’ export-oriented economy to one that is wage-led—
that is, an economy in which equity in incomes is compatible with growth. This paper
outlines a strategy to achieve that goal, based on an analysis of the structural constraints
to gender equity. That strategy has three components at the national level: 1) industrial
1
and agricultural development, coupled with trade policies to shift production to
emphasize price-inelastic goods and services; 2) restrictions on flows of physical and
financial capital; and 3) fiscal and monetary policies responsive to the goal of gender
equity. This approach requires policy shifts at the international level as well, including
the expansion of ‘special and differential treatment’ of developing countries in trade
agreements, demand management policies to stimulate growth in developed economies,
and regional coordination to ensure domestic benefits from foreign direct investment.
The paper is organized as follows. Section 2 explores the goal of gender equity
and provides a feminist-Kaleckian perspective on desirable macroeconomic outcomes
that will facilitate attainment of that goal. Section 3 examines the evidence on gender
outcomes in employment, wages, and job quality as well as macroeconomic conditions in
the recent period of globalization. Based on that analysis, section 4 advances a set of
feminist-Kaleckian macro-level policies to promote greater gender equity. Section 5
concludes.
2. GENDER EQUITY AS A MACROECONOMIC GOAL
The unequal distribution of income and resources, and in particular, gender
inequality, is a central concern in the quest to improve well-being. This is because
economic inequality can contribute to or perpetuate various forms of unfreedoms—such
as discrimination, social intolerance, and lack of political power— that inhibit the
acquisition of individual capabilities (Sen 1999). Freedoms are intertwined and any
feminist agenda for gender-equitable macro policies would benefit from a move for
simultaneous change in other arenas as well, especially the political. 1 The goal here,
however, is more modest—to consider how the gender distribution of income, wealth,
2
and labor might be made more equitable, understanding that greater equity in the
distribution of material resources can be a fulcrum for change in other domains.
A gender equitable economy requires policies to achieve several important goals.
First, equitable access to jobs is required through elimination of discriminatory
employment barriers. Second, equity in earnings is needed, with both women and men
able to earn living wages—wages sufficiently high to permit adults to adequately
provision for their families. 2 Provisioning for families requires relatively secure income
sources. This is particularly necessary for women who are sole breadwinners in their
households, but is also a prerequisite for women who are part of two-adult households.
This is because secure earnings are an important means to improve women’s power to
negotiate for an equitable distribution of household resources and unpaid labor. A further
requirement is equitable distribution of state resources that can contribute to a closure of
gender gaps in economic and social well-being, such as access to health, education, basic
infrastructure, and other public goods, and to redress market and social gender
inequalities.
With these goals in mind, this paper explores the evidence on the gender effects
of globalization in order to uncover the “pressure points” that inhibit movement toward
greater gender equity. From that analysis, we delineate a set of macro-level policies
capable of producing high-quality growth and development, where quality is defined as
the capacity for policies to close gender gaps without necessarily lowering men’s average
well-being. This approach differs from the mainstream, which sees the goal of
macroeconomic and trade policies as price stability, the elimination of barriers to trade,
sustainable debt, and for the more Keynesian, full employment. That is, both mainstream
3
and Keynesian goals are defined without a view to addressing the problem of gender
inequality in well-being. Rather, policies that might promote gender equality are most
often an afterthought. Further, some mainstream and Keynesian policies that promote
growth actually preclude or make gender equity more difficult to achieve. Thus, it is
necessary to start with the explicit goal of promoting gender equity in well-being, and
then proceed to an examination of the policy options consistent with that goal in the
context of a particular economic structure and set of international institutions. 3
Given this context, several questions are explored in this paper. Under what
conditions can women’s income be raised, while at the same time promoting economic
growth? Higher income for women—without pushing down men’s wages—implies a
redistribution of total income to women. It also presupposes a class redistribution—from
capitalists to women as workers. The key question then is what policies can shift a profitled export-oriented economy to one that is more wage-led? Further, how can this be done
while retaining the benefits of openness that afford developing countries access to
sophisticated technology that can raise productivity in the home country and validate
higher wages?
3. THE CONTEXT: GENDERED EFFECTS OF GLOBALIZATION AS
MARKET LIBERALIZATION
An examination of the gender effects of globalization and neo-liberal policies that
have led to trade and financial market liberalization is a starting point for assessing the
policies for promoting gender equity. In this section, we consider the gendered
employment effects of liberalization, the impact of globalization on macroeconomic
performance, and shifts in the state’s economic role in provision of a social safety net and
social spending on health and education.
4
(a) Gendered employment and earnings effects
Much has been made of women’s increased participation in paid labor activities
over the last 40 years. These trends, though not universally observed (Antecol 2000),
underscore the increased opportunities that globalization has provided for women. While
in many instances, women’s increased participation is voluntary, there are many other
cases of distress sales of labor—the so-called “added worker effect”—whereby falling
household incomes and male wages push women to seek waged work. There can and
often is, however, a gap between women’s willingness to do paid work and the
availability of such employment. The question of whether women have benefited from
increased access to work in this era of globalization then requires a consideration of a
broader set of labor market outcomes, including the jobs that women can get as well as
the conditions and pay of those jobs.
Gender and Job Access
Globalization has propelled women into labor markets in economies of varying
structures. Semi-industrialized economies that emphasize export manufacturing have
experienced a rise in the female share of employment, especially in the early phases of
industrialization. Women have been largely ‘crowded’ into labor-intensive export
manufacturing, facing both explicit and implicit restrictions on their access to more skillintensive jobs in non-tradeable fix-price industries 4 (Nam 1991; Hsiung 1996; Standing
1989, 1999; Mehra and Gammage 1999; Ozler 2000). 5 Women provide a cost advantage
to firms facing severe cost competition from other export-oriented economies. The
attractiveness of female workers is also related to the ease of shedding these workers,
5
based in part on gender norms that relegate women’s paid work to secondary importance
after their reproductive responsibilities.
Over time, as semi-industrialized economies mature, the process of feminization
of export employment may decline or even reverse. 6 In Taiwan, Hong Kong, South
Korea, and Singapore—that is, among the East Asian ‘tigers’—as well as in Mexico’s
maquiladoras, women’s share of manufacturing employment has fallen in recent years.
Defeminization appears attributable to be the dual process of tight female labor markets
that lead to upward pressure on female wages and the emergence of lower wage sites in
Asia and Latin America (Berik 2004; Brown and Cunningham 2002; Ghosh 2002; Jomo
2004). This cost squeeze has led to industrial restructuring in mature semi-industrialized
economies (SIEs) with manufacturing production shifting to a greater emphasis on skillintensive goods. It is not clear why women should be impeded from entering skillintensive industries, as educational gaps are narrowing in many countries. One possibility
is that firms prefer to invest in training for male workers, consistent with the view that
men deserve the more secure employment and are less likely to leave paid work to fulfill
domestic responsibilities. Women displaced from manufacturing have found employment
in service jobs, which have expanded as a share of total output, such that female shares of
employment have in fact declined only in the manufacturing sector (Mehra and
Gammage 2000).
An exception to the trend of feminization of employment has been in those
developing economies with less competitive manufacturing sectors, particularly in
Africa. Trade liberalization forced these economies to reduce tariffs on imports of laborintensive manufactures such as clothing, resulting in job losses for women who
6
outnumbered male workers in the garment industry. Many laid-off workers have been
pushed into informal employment (Fontana 2003). The evidence is not clear on whether
women are disproportionately hurt by this shift from formal to informal work since maledominated industries have also been affected. It is clear though that women as well as
men have experienced income declines and increased job insecurity in the shift to
informal employment, a topic that is discussed below (Benería 2003). Apart from these
exceptions, the dominant experience has been one of increased openings for women in a
limited set of jobs in export manufacturing sectors.
In agriculturally-oriented developing economies that have emphasized exports of
cash crops as part of their liberalization strategy, women have increased job opportunities
as seasonal or contract workers or as laborers on husbands’ or relatives’ land in the
production of export cash crops. 7 In some cases, such as Latin America, economic
restructuring, crisis, and globalization has led to the feminization of agriculture as women
seek remunerative employment to supplement declining family income (Deere 2004).
Some women have become producers of non-traditional agricultural exports (NTAEs). In
Latin America and South Africa, NTAEs are often produced on large-scale enterprises,
with women forming up to 80 percent of the workforce (Carr, Chen, and Tate 2000).
Finally, in developing economies that rely heavily on service exports to propel
growth (such as informatics and tourism), we observe that here too women are a large
share of export workers (UNDP1999; Davison and Sanchez-Taylor 1999; Freeman
2000). An additional though perhaps unintentional form of service sector export labor is
that of workers who emigrate to work as nurses and domestics, remitting income to
7
family members at home, and thus generating foreign exchange for the home economy. 8
The large majority of these workers are female (UNDP 1999).
Paradoxically, a number of countries also have very high relative rates of female
unemployment. Unemployment data are of questionable use due to measurement
problems. 9 However, the case of Caribbean economies is one where the data provide a
more accurate picture of women’s and men’s job access, due to the way unemployment is
measured. 10 Women’s unemployment rates there remain almost double men’s already
very high rates. 11 Similarly, in transition economies, women have experienced declines
in access to jobs relative to men (Bridger, Kay, and Pinnick 1996; Fodor 2004).
In sum, the clustering of women in export industries suggests the ‘feminization of
foreign exchange earnings,’ 12 as countries increasingly rely on export earnings to
purchase needed imports and to service external debts. While women are preferred
workers in price-elastic export industries (where there is a greater probability that higher
wages will result in employment losses), they continue to face difficulties in gaining
access to jobs that are more secure in non-tradables industries. Further, when there are
job shortages, women are sent to the back of the job queue.
Gender and Conditions of Employment
Employment has become increasingly flexible in the recent process of
globalization as employers attempt to reduce costs (Standing 1989, 1999). A notable
trend is the expanded use of women as subcontracted or home workers in
manufacturing. 13 Ghosh (2002) provides evidence for India that the trend towards
casualization, in the form of subcontracting and home production, was evident before the
Asian financial crisis, highlighting the competitive pressures amongst firms to lower
8
costs in the context of an increasing number of suppliers (e.g., China, and post-NAFTA,
Mexico) vying for access to developed country markets. The trend extends to the
agricultural sector where trade liberalization has created seasonal employment in the area
of agricultural exports (UNDP 1999; Deere 2004; UNRISD 2005). In the case of Chilean
and South African export grape industries, women are the preferred source of temporary
workers and hold a small share of permanent jobs (Barrientos 2001).
This trend is due in part to the continued adherence to a ‘male breadwinner’ bias,
which slots women for insecure jobs or home work. 14 Men are affected by these trends as
well, as the jobs they hold take on the character of women’s jobs (temporary or casual
status, limited job mobility, few or no benefits), but the percentage of women in ‘flexible’
jobs greatly exceeds that of men (UNDP 1999). For that reason, women’s increased
incorporation into the paid economy is under conditions inferior to those necessary to
provide them with secure income. The types of jobs they have access to constrain their
ability to raise their incomes and improve their working conditions, and come at a high
cost. 15 The seasonality of agricultural jobs, for example, implies there are no sustained
improvements in women’s employment status.
Gender, Wages, and Income
The evidence on earnings suggests that we might well add gender wage inequality to the
list of universal if not inevitable human events, along with taxes and death. This state of
circumstances persists despite the feminization of labor which was predicted to portend
well for women’s relative wages—rising demand for female labor should drive up their
wages relative to men’s.
9
There is some evidence of a narrowing of gender wage gaps in some countries
(Tzannatos 1999; World Bank 2001; Oostendorp 2004), 16 although in other countries,
gaps have widened (Standing 1989, 1999; Mehra and Gammage 1999; Artecona and
Cunningham 2002; UNRISD 2005). The case of the East Asian ‘tigers’ is instructive.
Despite rapid growth in exports that relied on female labor, gender wage gaps remain
persistently large, and have worsened in some cases (Jomo 2004). As the data in Table 1
show, during the 1990s the ratio of female to male wages in manufacturing fell in a
number of countries. Declines are also evident in Chile and Hong Kong (not shown
here).
Table 1. Female to Male Manufacturing Ratios, Selected Countries
Africa
Egypt
Kenya
Swaziland
Latin America
Brazil
Costa Rica
El Salvador
Mexico
Panama
Paraguay
1990
1995
1998
1999
67.9%
73.3%
87.7%
73.6%
92.8%
86.6%
68.8%
75.2%
53.6%
74.3%
94.1%
56.9%
70.9%
96.6%
68.7%
66.5%
79.5%
60.9%
79.9%
70.1%
71.0%
95.5%
81.1%
61.7%
73.1%
62.0%
69.7%
93.2%
54.6%
Asia
Bahrain
45.3%
43.6%
Cyprus
57.6%
60.1%
57.9%
54.2%
Georgia
62.6%
Korea
50.3%
54.1%
55.6%
Malaysia
50.1%
57.9%
Philippines
74.3%
78.2%
79.9%
Taiwan
61.6%
63.9%
64.8%
Source: International Labour Organization, Yearbook of Labour
Statistics 2004. For Taiwan, DGBAS (2002).
10
To understand the effect of globalization on gender wage gaps, it is necessary to
disentangle the effects of increased educational attainment for women, as compared to
the effects of indicators of globalization. Several studies have carefully controlled for
alternative factors that might raise female wages in order to isolate the effects of trade
and foreign direct investment (FDI) liberalization. A negative effect of export-orientation
on female relative wages has been found in several studies that cover developing and
developed economies (Gupta 2002; Oostendorp 2004).
These negative effects are evident also in several rapidly growing East Asian
economies. In Taiwan and South Korea, for example, competition from foreign trade in
concentrated industries is positively associated with wage discrimination against women
(Berik, et. al. 2004). There has been no tendency for the gap between male and female
wages to decline in China, with data indicating instead expanding inequality between
men's and women's earnings (Maurer-Fazio, et. al. 1999; Maurer-Fazio and Hughes
2002). Indeed, the proportion of the gender wage gap that is unexplained by individual
productivity characteristics is larger in the most liberalized sectors of the economy and
the smallest in the least liberalized—the state sector (Maurer-Fazio and Hughes 1999).
The portion of the gender wage gap that is unexplained by productivity differentials (and
thus is attributed to gender discrimination) rose from 52.5% in 1988 to 63.2 percent in
1995 (Gustaffson and Li 2000). Similar circumstances are at play in Vietnam.
Specifically, although women’s returns to skills are increasing, which contributes to a
narrowing of the gender gap, the discriminatory component of the wage gap has
increased. Liu (2004), for example, finds that while the ratio of female to male wages
11
rose from 77% in 1993 to 82% in 1998, the entire remaining wage gap between men and
women is explained by discrimination.
In contrast, in Brazil, there is evidence of a decline in the discriminatory
component of the gender wage gap in the 1990s, although in part this was the result of a
decline in male wages, resulting from stringent austerity policies (Arabsheibani, et. al,
2002). The extent to which the narrowing of the wage gap in Brazil can be attributed to
liberalization of trade and investment remains a question, however. Given the small share
of exports and imports in GDP in Brazil, this may not have been a causal factor in
reducing gender wage gaps.
In agricultural work, female earnings lag men’s substantially as well. The
distribution of benefits in the Chilean grape industry underscores the disadvantaged
position of female workers. For seedless grapes produced in 1993-94, producers
accounted for 11 percent of costs (of which 5 percent went to workers), while exporters
received 28 percent, importers 26 percent, and distributors 35 percent (Barrientos, Bee,
Matear, Vogel, and Kay 1999). The bargaining power of capital vis-à-vis workers is
revealed in this type of global value chain analysis, highlighting the difficulty of raising
women’s relative wages in this type of employment.
There are some exceptions to the negative picture we have drawn of the effect of
globalization on women’s relative earnings in the agricultural sector. Women’s earnings
have improved in some cases of NTAE production where they have access to or control
over land. One such case is Uganda (Fontana, Joekes, and Masika 1998) although this
enlarged area of economic activity for women does not appear to have disturbed the wide
12
gender gap in earnings in other sectors of the economy where women’s wages are
roughly 40 percent below those of men (Appleton, Hoddinott, and Krishnan 1996). 17
A variety of forces militate against closure of the gender earnings gap. Women in
semi-industrialized economies are ‘crowded’ in labor-intensive export industries—
precisely the ones with the lowest sunk costs and which thus tend to be more ‘mobile.’
Firm mobility produces a ‘threat effect’ that makes it difficult for women to obtain higher
wages. Firm mobility also makes it easier for firms to appropriate the gains of
productivity growth. In the case of Bangladesh’s female-dominated garment industry,
Bhattacharaya and Rahman (1999) found, for example, that profit margins increased from
13 percent to 24 percent in the early 1990s as productivity rose, with the wage share of
value-added falling.
Rodrik (1997) describes this phenomenon in terms of a flattened labor demand
curve, made more elastic by the emergence of alternative labor supplies beyond the
domestic economy. Workers bear the costs of increased capital mobility in the form of
lower wages. Seguino (2000a) finds evidence of this effect in the case of Taiwan where
the gender wage gap widened in the period 1982-90. The increase in total FDI (the
absolute value of the sum of inward and outward FDI), which reflects greater firm
mobility, appears to have weakened women’s relative bargaining power. 18
A second phenomenon that inhibits closure of the gender wage gap is the
informalization of labor contracts through the process of subcontracting and outsourcing.
Workers in these arrangements, as noted, are largely women. Because of their unstable
work arrangements and isolation, they face greater difficulties in bargaining for higher
wages than formal sector workers. There is evidence that wages in this type of
13
employment are significantly lower than for workers similarly employed in the formal
sector (Roh 1990; Kabeer 2000; Balakrishnan 2002). The gender wage gap is thus
probably even wider than the official figures imply, because wages of home workers
often go unrecorded in official surveys. Further, low wages in this sector are likely to
hold down wage gains for women employed in other sectors that provide residual
employment.
There is some evidence that gender wage inequality is functional to growth with
gender gaps in earnings positively related to growth rates of GDP in SIEs where women
are segregated in export manufacturing industries (Seguino 2000b). 19 Under those
conditions, efforts to close the wage gap without countermeasures to offset the negative
effect on export demand will slow growth, putting gender equity and economic growth at
odds. In light of all these factors, evidence of rising profit shares of income in numerous
economies is not surprising (Epstein and Power 2002; Harrison 2002). Thus an important
effect of globalization is a redistribution from labor to capital as economies become more
profit-led.
Effects on Gender Inequality in Leisure and Caring Labor
Theoretically, job access for women can improve their level of well-being and
that of the children they care for—if this provides more income, and if women can find a
way to juggle their care responsibilities (or if men take on more unpaid care work). Time
use data are sparse, and in particular, trend data are lacking. What little evidence is
available suggests that women’s time burdens have increased with globalization. Further,
studies such as Floro (1995) indicate that the time intensity of women’s labor has
14
increased. Men’s performance of unpaid labor does not appear to have increased enough
to compensate, suggesting a decline in female leisure.
To date, there is little research that examines the long-term effects on women’s
well-being and empowerment of their increased employment access. Are there
measurable effects that show up in measures of well-being or household bargaining
power? We need to answer this question in order to determine whether economic and
trade liberalization provide the conditions for women to achieve equitable standards of
living and power with men over time, even if women’s incorporation into the labor force
in the short term is under unfavorable—and indeed exploitative—conditions.
Some studies find that as women’s access to outside income rises, they are better
able to renegotiate the distribution of resources within the household to the benefit of
themselves and their children. The source and stability of that income appears to play a
role in influencing women’s bargaining power. For example, Kabeer’s (2000) study of
Bangladeshi garment workers found that women employed as home workers with
insecure and intermittent earnings were less able to renegotiate their position in
patriarchal households than women with higher and more stable earnings.
One study considers these questions for Asian economies where rapid growth was
fueled by low-cost female labor in a period of otherwise global economic stagnation
(Seguino 2002). A variety of well-being indicators suggest there has been some closure
of gender gaps in well-being, but those countries that have improved the most were the
slowest growing in the region and the least successful as ‘open’ economies. In the case of
South Korea, China, and India, a disturbing trend has been the declining ratio of females
to males in the population (Wink and Klasen 2003). In these economies, deemed to be
15
performing well macroeconomically, women’s life chances relative to men’s have
diminished—a trend linked to sex selective abortion. Population ratios can be viewed as a
measure of society’s valuation of women. Their access to paid employment in these
countries has apparently not resulted in sufficient leverage to alter gender perceptions that
devalue women. This result leads to the question of whether the conditions under which
women are incorporated into the paid economy are adequate to eventually transform
conditions of gender inequality into gender equity.
(b) Macroeconomic effects of globalization
The macroeconomic effects of globalization on gender equality can be subdivided
into two categories: 1) demand-side effects and 2) the shifting role of the state. These are
discussed in turn.
Demand-side Effects
In the context of globalization, external
factors increasingly determine the level of output and employment, while the importance
of domestic demand is lessened. Trade liberalization raises the share of exports and
imports in demand. Further, investment liberalization that facilitates inward and outward
FDI requires domestic economies to compete with conditions, including labor costs, in
other countries.
These changes alter the relationship between income distribution and growth. In
particular, as external factors have a larger effect on aggregate demand, economies are
more likely to become profit-led—redistribution to profits raises output and employment
(You 1989; Bhaduri and Marglin 1990). This is because higher wages, once a benefit in
the form of a demand-side stimulus in more closed economies (assuming spending out of
16
wage income exceeds spending out of profit income), now have a potentially negative
demand-side effect on exports and investment demand. This negative effect is based on
an assumption that wage increases do not affect labor productivity.
Thus, while liberalization may result in a demand-side stimulus if exports and
investment rise, this can only occur if wage growth is constrained, particularly the wages
of those employed in ‘mobile’ export industries. Women are more adversely affected as
they tend to be disproportionately concentrated in industries where vertical FDI
dominates. Vertical FDI, as compared to horizontal FDI, implies production for export
rather than sale to the domestic economy. Vertical FDI implies the firm goal of taking
advantage of differences in factor costs among countries, concentrating labor-intensive
activities in those countries with lower labor costs (Kucera 2001). 20
Financial market liberalization can also produce negative demand-side effects.
Four effects are especially important for gender relations: 1) balance of payments
difficulties, 2) constraints on use of monetary policy, leading to slower rates of growth, 3)
increased economic volatility, and 4) reduced latitude for use of fiscal policy as a
stabilization tool. Regarding the first, the inflow of financial capital raises the demand
for imports. If inflows are too rapid, inflation and exchange rate appreciation may result,
leading to balance of payments difficulties, particularly if inflows are directed toward
non-productive expenditures such as luxury goods and real estate speculation. The result
may be a contraction of aggregate demand. Beyond the short-run effect of balance of
payments difficulties and tendencies toward stagnation, in the longer run, sustaining a
trade deficit causes external debt to build up, leading to capital flight and a financial crisis
if it becomes seen as unsustainable (Bhaduri 1999).
17
Second, financial liberalization can contribute to a decline in growth rates.
Liberalization permits investors to cross borders to seek out the highest rate of return on
financial instruments, leading monetary authorities to raise interest rates in an effort to
establish credibility with financial markets. The cumulative effect is that globally, interest
rates have been ratcheted upward and are historically high (Eatwell 1996; Felix 1998). 21
High interest rates, it is argued, have contributed to a slowdown in economic growth and
employment generation. A further effect of financial liberalization is economic volatility,
as seen in the 1990s. Financial panics, more common in the age of elimination of capital
controls, can lead to rapid capital outflows, sharp declines in asset prices, bankruptcies,
and recession as evidenced by events in Mexico in 1994 and Asia in 1997.
Finally, because fiscal deficits are interpreted by financial markets to be
inflationary, governments are constrained in their policy instruments for stimulating
output and employment. Deficit spending increasingly becomes difficult to manage
without precipitating a capital outflow, to which countries respond by raising interest
rates. The pressure to reduce state spending is increased as footloose capital gains
increased leverage to bargain for lower tax rates as a condition of investment (Tanzi
1995; Poterba 1997). 22 If spending levels are to be maintained, taxes must be borne by
the immobile factor, labor, while taxes on the mobile factor fall. Thus, there is a tendency
toward reduction of government spending, and a redistribution of the burden of that
spending from capital to labor (Wallerstein and Przeworski 1995). In sum, the traditional
tools of fiscal and monetary policy are constrained by financial markets that veto budget
deficits and demand high interest rates.
18
The net effect of these processes has been a slowdown in economic growth
globally (Maddison 1995). These demand-side pressures that produce a deflationary bias
have made it difficult for countries to overcome chronically high rates of unemployment.
Because women are more likely than men to be unemployed, the difficulties of
stimulating growth and employment in open economies weigh more heavily on them. It
thus appears that a major vehicle for improving gender equity—increasing women’s
relative access to jobs—is increasingly unobtainable in the era of globalization.
Moreover, the gender effects of financial crises have been well-documented. Lim (2000)
and Singh and Zammit (2002) note that in some Asian countries (Indonesia and South
Korea), women were the first to lose their jobs during the financial crisis. Women thus
not only provided the unpaid work that was critical to family and community survival,
but also bore a disproportionate increase in unemployment.
The Shifting Role of the State
Economic and trade liberalization have contributed to restrictions on state
intervention in the economy in two important arenas (in addition to demand management
policies discussed above)—the provision of a social safety net and the reduction in tools
required for states to promote development and productivity growth.
Reduction in the provision of social services is related to the pressure on states to
eliminate budget deficits. This pressure, as noted above, is due to financial market
liberalization, stabilization and structural adjustment policies, and declining corporate tax
contributions. Of course, even prior to the current period of liberalization, entitlement
programs to a greater or lesser degree differentially benefited full-time workers—mainly
19
males. Temporary or part-time workers, and those who spend time in unpaid labor—
largely women—have had less coverage.
This problematic has been exacerbated by cuts in social expenditures such as
health care, education, food, and housing subsidies and the imposition of user charges for
public services which low-income women especially have relied on for ensuring the
health and educational needs of children. 23 As a result, women, who act as the economic
‘shock absorbers’ face increasing demands on their time with labor effort rising to
maintain family well-being in order to accommodate the decline in public services.
The ability of states to intervene in the development process to promote higher
value added production activities has also narrowed. Countries have been under pressure
to privatize domestic industries and to relinquish the tools of industrial/agricultural
policy. This trend has been accompanied by trade and investment agreements
(institutionalized in the WTO) which require governments to liberalize trade, drop
preferential treatment of domestic firms, and allow unrestricted foreign direct investment.
These conditions make it increasingly difficult to pursue policies that would support
domestic producers, providing them with the resources needed to move up the industrial
ladder to more skill-intensive goods production where prices are more inelastic and
which are not facing declining terms of trade. 24 Further, a number of countries have
made central banks independent of government, limiting their ability to use preferential
lending as a means to support the growth of strategic manufacturing, service, or
agricultural industries.
In agriculturally-based economies, such as a number of African economies,
investment is public sector-led. Public sector spending on infrastructure can ‘crowd in’
20
private sector spending, acting as a stimulus to productivity growth, due in part to market
failures where farmers lack access to resources, such as credit and training. Constraints
on public investment have gendered effects in a number of African economies, where
women comprise the bulk of farmers. Cuts in infrastructure investments and restrictions
on the use of formerly public resources owing to privatization has led to an increase in
women’s unpaid labor burden, inhibiting their participation in paid activities. 25 Further,
agriculturally-based economies, wedded to the production of export commodities with
falling terms of trade, require government investment to improve the productive capacity
of small, largely female farmers in order to raise income.
In sum, then, while the structural conditions of semi-industrialized and
agricultural economies differ, they share a reliance on export goods for which the terms
of trade are worsening, and the decreasing ability of the state to use tools of industrial or
agricultural policy due to pressures to privatize and reduce government spending.
4. FEMINIST MACROECONOMIC POLICIES TO PROMOTE GENDER
EQUITY
The challenges to the achievement of gender equity in the context of globalization
can be summarized as follows. With trade liberalization, some women in developing
economies have had expanded access to employment, improving short-term incomes.
For paid work to raise women’s status, however, it must provide a secure income and
rising wages relative to men’s. But females are concentrated in unstable, low paid deadend manufacturing jobs—a phenomenon mirrored in service and agricultural sectors of
developing economies (UNDP 1999; Barrientos 2001). Thus, the types of jobs that many
women hold, particularly those in export sectors, do not possess the characteristics that
would allow them to achieve equity.
21
The contradiction is that while women’s low wages motivate employers to hire
them, attempts to raise wages lead to a decline in employment as firms relocate
production. Increases in productivity might ratify wage hikes, but firms are not pressured
to raise productivity because wages are so low. Wage hikes cannot stimulate
improvements in productivity since the mobility of firms makes it difficult for efficiency
wage effects to emerge. 26 Further, these jobs tend to be flexible, reducing the incentive
for employers to invest in worker training.
The insecurity of jobs that women hold can, in theory, be offset by appropriately
designed social safety nets. The goal of gender equity would be further assisted by fullemployment policies and a reduction in economic volatility. These conditions are not met
in the current environment due to constraints on public spending and financial
liberalization that have resulted in slow growth and an increase in the variance of output
and employment.
Given this context, what macro-level policies should feminists advocate to
promote equity in the medium- to long-run? First, such a policy framework should
include promotion of the type of development consistent with full employment and in
which economies are wage-led with rising productivity. By full employment, we refer to
the absence of involuntary unemployment and involuntary part-time or informal
employment. Our usage of the term full employment differs from the standard usage,
which often ignores unpaid labor, as well as the level of pay. 27 It would not be ideal to
promote full employment (i.e., the eradication of unemployment and underemployment)
without a concomitant increased sharing of unpaid labor by men, so that women’s access
to paid work could be offset by a reduction in unpaid labor. Second, by wage-led growth,
22
we refer to the set of structural, policy, and institutional conditions in which a
redistribution to wages from profits is a stimulus to growth.
Full employment that produces labor shortages can make it easier for women to
access employment in male-dominated industries that pay higher wages, facilitating job
integration and narrower wage gaps. The movement toward full-employment also helps
to put upward pressure on women’s wages by tightening labor markets. For this strategy
to work, however, economies must be wage-led—that is, redistribution to wages must be
a stimulus to output and growth, thus ratifying higher relative female wages.
(a) Income distribution and growth
The promotion of full-employment wage-led growth in open economies is in
essence a problem of the relationship between income distribution and macroeconomic
outcomes, explored in recent years by neo-Kaleckian economists. 28 In these models,
some components of aggregate demand are a function of the distribution of income and
the models explore the macroeconomic conditions necessary for redistribution from
profits to wages (via, for example, a higher minimum wage or increased worker
bargaining power) to stimulate output and growth.
While most neo-Kaleckian models are not gendered, it is possible to engender
these models by incorporating gendered patterns of labor supply and demand. One way
this can be done is to model labor supply to economic sectors as segregated along gender
lines, reflecting women’s greater responsibility for care activities as well as the tendency
to segregate women in labor-intensive export activities in the productive sector.
Macro models that recognize gendered job allocation give some insight into the
conditions required to make higher wages compatible with growth. Blecker and Seguino
23
(2002), for example, model output and growth in an export-oriented semi-industrialized
economy. In this two-sector model, female labor is used to produce export goods and
male workers are concentrated in the nontradables sector (the model does not consider
the care economy). Higher relative female wages could stimulate aggregate consumption
(assuming female workers have a higher propensity to consume than capitalists), thereby
producing a demand-side stimulus. But those higher wages will also cause export prices
to rise, in which case export demand declines. Alternatively, higher wages will squeeze
profits in that sector, resulting in a decline in sectoral investment. This is especially likely
in labor-intensive industries in which ‘footloose’ firms find it easier to relocate to lowerwage sites. The negative demand-side effect of higher female wages on exports and
investment is likely to be larger than the potential consumption stimulus, especially if
exports are price elastic. As a result, higher female wages in such an economy are
deflationary.
(b) State-level development strategies
Given these constraints, state-level policy can be used to attenuate the
deflationary impact of higher female wages. This can be partially achieved by incentives
to firms to shift the production mix in female-dominated labor- intensive industries
produce exports with a low price elasticity of demand (e.g., where quality matters).
Higher female wages in that case reduce the negative effect on export demand. Further, in
economies that are articulated, that is, where export goods are also domestically
consumed, higher female wages may stimulate consumption demand, offsetting the
decline in export demand. Both of these possibilities imply the need for an
24
industrial/agricultural development strategy to promote both articulation and an export
product mix that permits rising female wages without a (large) negative effect on exports.
To make gender equity compatible with growth in an open economy also requires
boundaries on the behavior of firms, and in particular, limits on physical capital mobility
(inward and outward FDI). Policies to slow the speed at which firms ‘run’ from higher
wages allows for the possibility that wage hikes can stimulate productivity growth, either
because firms make greater efforts to achieve efficiency by investing in technological
improvements, or because workers are induced to be more productive as a result.
In the first case, incentive structures that force firms to respond to higher wages
by investing in technological improvements cause investment to rise rather than fall as
wages rise, thus producing a demand-side stimulus. 29 There may be limits on the
effectiveness of this type of policy in labor-intensive industries in which women are
employed, given that technological frontiers will eventually be reached, thus prohibiting
firms from further overcoming higher wage costs with technological improvements.
Nevertheless, evidence from a number of semi-industrialized economies suggests that
there can be a positive wage-investment-productivity nexus over some range of wages
and technological level.
Absent a positive effect of wages on investment, efficiency wage effects of
higher wages may emerge when FDI is less mobile. This implies that unit labor costs stay
constant and may even fall when wages rise. 30 In this case, competitiveness is not
hampered by higher wages, and export and aggregate demand do not fall. Inward FDI
might also be restricted to strategic industries and excluded from others for some period
25
of time, giving domestic firms the opportunity to gain competitiveness, with the state
using its leverage to assist firms to raise productivity in response to higher wages.
Managing FDI is possible, even in a globalized economic environment. As Chang
(1998) notes, multinational corporations are willing to accommodate restrictive policies
so long as changes are predictable and announced in advance. Moreover, FDI tends to be
influenced by the political and economic climate, the quality of the government
bureaucracy that implements policy, and financial and exchange rate policies. Policies
that stabilize the economy, including capital controls that act as speed bumps, can reduce
volatility and may attract FDI.
Portions of the strategy outlined here have been effectively implemented in
several countries. South Korea, for example, has successfully moved up the industrial
ladder, relying heavily on state intervention. It used a variety of tools to discipline and
support ‘immobile’ domestic firms to increase their productivity as they moved into
targeted strategic industries (FDI was greatly restricted). Firms that wanted access to
government subsidies and other benefits were required to increase exports. With rising
wages and limited mobility, the only alternative to escape the profit squeeze was for
firms to raise productivity, even in labor-intensive industries where the potential for
productivity gains was thought to be limited. The result was a rise in wages that
stimulated investment and productivity growth (Seguino 1999-2000). As a result,
employment expanded even as wages rose. Singapore, a country with a much larger share
of FDI in investment, also attempted to raise wages in the mid-1980s. The goal was to
stimulate multinationals to shift to more capital-intensive production methods and to
thereby raise productivity. This would have ratified wage increases, but this effort failed
26
due to the mobility of firms, many of which simply relocated to lower cost sites in Asia
(Huff 1995).
South Korea’s strategy was built on the premise that state intervention is required
to stimulate productivity and to move the economy into higher value-added industries. 31
This strategy is time-consuming for private firms to underwrite without government
support, and thus is otherwise unlikely to be undertaken. These policies were
accompanied by state investment in education, technology, and support of research and
development—public sector spending that ‘crowded in’ private investment, raising
profitability by increasing productivity. Restrictions on FDI made it easier for the state to
discipline as well as reward firms, and to nurture domestic capital, with pressure on these
firms to share their gains with workers in the form of higher wages.
None of these conditions implies the need to close the economy to trade and
investment, but they do highlight the importance of managing these, a policy approach
that we could label ‘industrial policy under conditions of strategic openness’—openness
that is managed to achieve specific development and growth goals that serve the broader
goal of achieving gender equity.
Industrial and agricultural development policies would have to be accompanied
by compatible monetary policies. Because low wages for women substitute for currency
devaluation, a crawling peg that adjusts for rising female wages can offset the negative
effect on aggregate demand in cases where devaluations are not contractionary.
Devaluations also close the gender wage gap in that real male wages fall (since some
consumption goods are imported and are now more costly). 32 This topic has been
27
relatively unexplored, but here we point to the importance of incorporating gender equity
goals in the formulation of monetary policy.
In sum, for a country to reorient export and investment to support equity with
growth requires an expanded role for government in managing economic outcomes. This
is particularly the case with regard to assisting or prodding domestic firms to move into
the production of more price inelastic export goods or services, and using investment and
trade policy to encourage articulation. There are a variety of tools at the disposal of the
domestic economy to promote greater equity. These include the use of state policies to
promote technology acquisition and educational attainment; the use of fiscal resources to
provide a more equitable social safety net for women; public investment in infrastructure
that reduces women’s time spent in unpaid labor; and legislation that facilitates male
participation in caring labor. Minimum wages and labor standards can also improve
women’s wages and working conditions, including those in informal employment. These
strategies need to be coupled b y technical support to small and medium sized businesses
to raise productivity. 33
(c) Collective action at the international level
There are a number of external constraints that would need to be overcome as
well in order to achieve higher rates of growth induced by rising wages and productivity.
The poorest countries have the weakest power vis-à-vis multinationals because their
enticement is primarily low wages. Bargaining strength of these countries may be
enhanced by regionally coordinated industrial policies. For example, the Caribbean has a
locational advantage as a tourism destination, but many of the benefits of this type of
activity flow to multinational tourism firms. A coordinated Caribbean tourism policy
28
would allow countries to collectively bargain for higher regional wages and greater
backward linkages to local economies, for example, in local sourcing for food purchases.
Without a locational advantage with which to bargain, it may be that poor countries are
constrained to permit inward FDI that capitalizes on low wages.
Second, a change in policies and rules emanating from the World Trade
Organization (WTO) and trade agreements is needed to permit special and differential
treatment for developing countries that allow the use of national-level tools to influence
the direction and rate of economic growth. These include support for strategic industries,
protection of infant industries, and implementation of rules on foreign direct investment
beneficial to domestic firms and productivity growth. 34
The achievement of gender equality is also dependent on demand expansion in
industrialized economies which, however, has slowed appreciably since the 1970s.
Further, income inequality has risen in those economies, suggesting an additional
demand-side constraint on the growth of developing economies. While open economies
are more likely to be profit-led, the global economy can be viewed as a closed wage-led
economic system. The declining income of those at the bottom of the distribution in
industrialized economies has reduced demand for manufactured or primary commodity
exports from developing economies—goods that higher income groups are less likely to
consume. To rectify this, redistributive policies in the north coupled with coordination of
expansionary macroeconomic policies could stimulate northern demand for southern
goods, thus permitting greater growth of (female) wages in the south.
29
5. SUMMARY AND CONCLUSIONS
How do we raise women’s well-being in export industries while at the same time
promoting economic growth? This paper presents an answer to that question, arguing for
a heightened role for the state in managing the economy in controlling physical and
financial capital flows, and setting industrial or agricultural policy. Country-specific
development policies will differ depending on the structure of the economy, the nature of
gender employment segregation, and human capital differences. Nevertheless, the basic
goal is to provide a policy framework that: 1) allows productivity to rise in femaledominated industries; 2) promotes strategic industries which can afford to pay high wages
to workers; and 3) allows pursuit of full employment through demand-side management
policies.
In this context, macroeconomic policies could include restrictions on physical
capital mobility in a way that constrains firms to upgrade rather than run from higher
wages. A non-exhaustive list of corollary policies include state-level investments in
education and health that are gender-enabling, expenditures that permit women and men
to combine paid and unpaid work, capital controls, and gender-sensitive monetary policy.
Proposing increased state intervention in the economy at a time when political
pressures are in the opposite direction may seem fanciful. It seems even more unlikely
that individual countries, especially small, poor countries, will be able to effectively
challenge the winds of economic and trade liberalization. That said, those concerned with
economic and social equity can still find entry points for action. Engaging in national
debates on gender equitable proposals is the first step in stimulating discussion beyond
30
domestic borders. This may eventually lead to broad consensus at the international level,
be it within international bodies or in regional organizations.
These proposals, if they achieve the desired results, would fundamentally alter
power relations. They stand in opposition to current trends that limit the possibility for
increasing women’s bargaining power. Nevertheless, the improvement in women’s
status—now an internationally-recognized Millennium Development Goal adopted by
170 governments —has the potential to alter unequal gender relations and may be met
with resistance. That conflict can be lessened if the economic pie is expanding so that
women’s access to resources does not come solely from a reduction in the material
resources going to men. We can also hope that gender norms and stereotypes change
along the way such that economic goals include a greater emphasis on the achievement of
well-being for women and the families they care for.
31
REFERENCES
Amsden A. 1998. A theory of government intervention in late industrialization. In State
and Market in Development: Synergy or Rivalry?, Putterman L, Rueschemeyer D
(eds). Lynne Rienner Publishers, Boulder, CO.
Antecol H. 2000. An examination of cross-country differences in the gender gap in labor
force participation rates. Labour Economics 7: 409-26.
Appleton S, Hoddinott, J, Krishnan, P. 1996. The gender wage gap in three African
countries. Centre for the Study of the African Economies Working Paper No 96-7,
University of Oxford.
Arabsheibani GR., Carneiro F, Henley A. 2003. Gender wage differentials in Brazil:
Trends over a turbulent era. World Bank Policy Research Working Paper 3148.
Artecona R, Cunningham W. 2002. Effects of trade liberalization on the gender wage gap
in Mexico. Policy Research Report Working Paper No. 21, World Bank.
Balakrishnan R. (ed). 2002. The Hidden Assembly Line: Gender Dynamics of
Subcontracted Work in a Global Economy. Kumarian Press, Bloomfield, CN.
Barrientos S. 2001 Gender, flexibility, and global value chains. IDS Bulletin 32 (3): 8393.
Barrientos S, Bee A, Matear A, Vogel I, Kay C. 1999. Women and Agribusiness:
Working Miracles in the Chilean Fruit Export Sector. London: MacMillan.
Benería L. 2003. Gender, Development, and globalization: Economics as if People
Mattered. Routledge, New York and London.
Berik G. 2004. Growth and gender equity in East Asia. Background Paper for the
UNRISD Report Gender Equality: Striving for Justice in an Unequal World.
Berik G, Rodgers Y, Zveglich J. 2004. International trade and gender wage
discrimination: Evidence from East Asia. Review of Development Economics
8(2): 237-254).
Bhaduri A. 1999. Macroeconomic theory and policy in developing countries. In
Globalization and Progressive Economic Policy, Baker D, Epstein G, Pollin R
(eds). Cambridge University Press, Cambridge.
Bhaduri A, Marglin S. 1990. Unemployment and the real wage: The economic basis for
contesting political ideologies. Cambridge Journal of Economics 14 (4): 375-93.
32
Bhattacharya D, Rahman M. 1999. Female employment under export propelled
industrialization: Prospects for internalizing global opportunities in the apparel
sector in Bangladesh. Occasional Paper No. 10, United Nations Research Institute
for Social Development (UNRISD).
Black S, Brainerd E. 2002. Importing inequality? The effects of increased competition on
the gender wage gap. NBER Working Paper No. W 9110, Cambridge, MA.
Blackden CM, Bhanu C. 1999. Gender, growth, and poverty reduction. World Bank
Technical Paper No. 428.
Blecker R. 2002. Distribution, demand and growth in Neo-Kaleckian macro models. In
The Economics of Demand-led Growth: Challenging the Supply-side Vision of the
Long Run, Setterfield M (ed.).Edward Elgar, Chelthenham, UK, pp. 129-52.
Blecker R, Seguino S. 2002. Macroeconomic effects of reducing gender wage inequality
in an export-oriented semi-industrialized economy. Review of Development
Economics 6(1): 103-119.
Blumberg RL. 1988. Income under female vs. male control: Hypotheses from a theory
and data from the Third World. Journal of Family Issues 9 (1): 51-84.
Braunstein E. 2000. Engendering foreign direct investment: Family structure, labor
markets, and international capital mobility. World Development 28 (7): 1157-72.
Braunstein E, Hertz T. 1998. A gendered dynamic model of export-led growth. Paper
presented at ASSA meetings, January 3-5, Chicago, IL.
Bridger S, Kay R, Pinnick K. 1996. No More Heroines? Russia, Women and the Market.
Routledge, New York and London.
Brown C, Cunningham W. 2002. Gender in Mexico’s maquiladora industry. Working
Paper #2002-8. Center of Border Economic Studies, University of Texas-Pan
American.
Carr M, Chen M, Tate J. 2000. Globalization and home-based workers. Feminist
Economics 6 (3): 123-42.
Chang HJ. 1998. Transnational corporations and strategic industrial policy. In
Transnational Corporations and the Global Economy, Kozul-Wright R,
Rowthorn R (eds). MacMillan Press Ltd for WIDER, London
Darity W. Jr. 1995. The formal structure of a gender-segregated low-income economy.
World Development 23(11): 1963-68
33
Davison JO, Sanchez-Taylor J. 1999. Sun, Sex and Gold: Sex Tourism in the Caribbean.
Rowman and Littlefield, Lanham, MD.
Deere CD. 2004. The feminization of agriculture? Economic restructuring in rural Latin
America. Background paper, Geneva: United Nations Research Institute for
Social Development.
Directorate General of Budget, Accounting and Statistics (DGBAS). 2002. Yearbook of
Earnings and Productivity Statistics. Republic of China:
Dolan C, Humphrey J, Harris-Pascal C. 1999. Horticulture commodity chains: The
impact of the UK market on the African fresh vegetable industry. IDS Working
Paper No. 96, Brighton, UK: Institute of Development Studies.
Dollar D, Gatti R. 1999. Gender inequality, income, and growth: Are good times good
for women? Policy Research Report on Gender and Development, Working paper
series No. 1, World Bank
Eatwell J. 1996. International financial liberalization: The impact on world development.
Discussion Paper Series, New York: UNDP, Office of Development Studies.
Elson D, Cagatay N. 2000. The social content of macroeconomic policies. World
Development 28 (67): 1347-64.
Epstein G, Power D. 2002. The return of finance and finance's returns: Recent Trends in
rentier incomes in OECD countries, 1960-2000. Research Brief 2002-2, Political
Economy Research Institute.
Erturk K. 2001-2002. Overcapacity and the East Asian crisis. Journal of Post-Keynesian
Economics 24 (2): 253-75
Felix D. 1998 Asia and the crisis of financial globalization. In Globalization and
Progressive Economic Policy, Baker D, Epstein G, Pollin P. (eds). Cambridge
University Press, Cambridge.
Fernandez-Kelly P, Sassen S. 1993. Recasting women in the global economy:
Internationalization and changing definitions of gender. Russell Sage Foundation
Working Paper #36.
Floro M. 1995. Economic restructuring, gender and the allocation of time. World
Development 23(11): 1913-29.
Fodor E. 2004. Women at work: The status of women in the labour markets of the Czech
Republic, Hungary, and Poland. Background paper for UNRISD Report on
Gender Equality: Striving for Justice in an Unequal World.
34
Fontana M. 2002. Modeling the effects of trade on women at work and at home: A
comparative perspective. Mimeo, IFPRI.
_____. 2003. The gender effects of trade liberalisation in developing countries: A review
of the literature. University of Sussex, Discussion Papers in Economics No. 101.
Fontana M, Joekes S, Masika R. 1998. Trade liberalisation: Gender issues and impacts.
Department for International Development (DFID), United Kingdom.
Freeman C. 2000. High Tech and High Heels in the Global economy: Women, Work, and
Pink Collar Identities in the Caribbean. Duke University Press, Durham, NC.
Ghosh J. 2002. Globalisation, Export-oriented employment for women, and social policy:
A case study of India. United Nations Research Institute for Social Development
(UNRISD).
Gupta, ND. 2002. Gender, pay, and development: A cross-country analysis. Labour and
Management in Development Journal 3(2).
Gustaffson B, Li, S. 2003. Economic transformation and the gender earnings gap in urban
China. Journal of Population Economics 13: 305-29.
Harrison A. 2002. Has globalization eroded labor’s share? Some cross-country
Evidence. Mimeo, University of California, Berkeley.
Hill MA, King E. 1995. Women’s education and economic well-being. Feminist
Economics 1(2): 21-46.
Hsiung PC. 1996. Living Rooms as Factories: Class, Gender, and the Satellite Factory
System in Taiwan. Temple University Press, Philadelphia, PA:
Huff WG. 1995. What is the Singapore model of economic development? Cambridge
Journal of Economics 19: 735-59.
Jomo KS. 2004. Globalization, export-oriented industrialization, and female employment
in East Asia. Paper prepared for UNRISD project on Globalization, Export
Oriented Employment for Women and Social Policy.
Kabeer N. 2000. The Power to Choose: Bangladeshi Women and Labour Market
Decisions in London and Dhaka. Verso, London.
Klasen S. 2002. Low schooling for girls, slower growth for all? Cross-country evidence
on the effect of gender inequality in education on economic development. World
Bank Economic Review 16 (3): 345-373
35
Kongar E. 2004. Importing equality or exporting jobs? Competition and gender wage and
employment differentials. Working paper, Carlisle, PA: Dickinson College.
Kucera, D. 2001. The effect of core worker rights on labour costs and foreign direct
investment: Evaluating the ‘conventional wisdom. Mimeo, International Institute
of Labor Studies, Geneva.
Kucera D, Milberg W. 2000. Gender segregation and gender bias in manufacturing trade
expansion: Revisiting the ‘Wood Asymmetry.’ World Development 28 (7): 11911210.
Lim J. 2000. The effect of globalization and the East Asian crisis on the employment of
women and men: The Philippine case. World Development 28 (7): 1285-1306.
Liu AYC. 2004. Gender wage gap in Vietnam: 1993 to 1998. Journal of Comparative
Economics 32 (3): 586-96.
Long L., Hung L., Truitt A., Phuong ML, Nguyen AD. 2000. Changing gender relations
in Vietnam's post Doi Moi era. World Bank Policy Research Report Working
Paper No. 14. World Bank, Washington, DC.
Maddison A. 1995. Monitoring the World Economy 1890-92. OECD, Paris.
Maurer-Fazio, M, Rawski, TG, Zhang, W. 1999. Inequality in the rewards for holding up
half the sky: Gender wage gaps in China's urban labor markets, 1988-1994.
The China Journal 41: 55-88.
Maurer-Fazio M, Hughes J. 2002. The effects of market liberalization on the relative
earnings of Chinese women. William Davidson Institute Working Paper 460.
Marquetti A. 2004. Do rising real wages increase the rate of labor-saving technical
change? Some econometric evidence.” Metroeconomica 55(4): 432-41.
Mehra R, Gammage S. 1999. Trends, countertrends, and gaps in women’s employment.
World Development 27 (30): 533-50.
Mishel L, Bernstein J. 1999. The State of Working America 1997-98. M.E. Sharpe, Inc,
Armonk, NY.
Nam JL. 1991. Income Inequality between the Sexes and the Role of the State: South
Korea 1960-1990. Unpublished Ph.D. dissertation, Department of Sociology,
Indiana University.
Newman C. 2000. Worker and firm determinants of piece rate variation in agricultural
labor markets. Economic Development and Cultural Change 49 (1): 137-69.
Oostendorp R. 2004. Globalization and the gender wage gap. World Bank Policy
Research Working Paper 3256.
36
Ozler S. 2000. Export orientation and female share of employment: Evidence from
Turkey. World Development 28 (7): 1239-1248.
Panic M. 1998. Transnational corporations and the nation state. In Transnational
Corporations and the Global Economy, Kozul-Wright R, Rowthorn R (eds),
MacMillan Press Ltd for WIDER, London.
Poterba J. 1997. The rate of return to corporate capital and factor shares: New estimates
using revised national income accounts and capital stock data. Working Paper No.
6263. National Bureau of Economic Research, Cambridge, MA.
Rama M. 2001. The consequence of doubling the minimum wage: The case of Indonesia.
Industrial and Labor Relations Review 54 (4): 864-81.
Rodrik D. 1997. Has Globalization Gone Too Far? Institute for International Economics,
Washington, DC.
Roh M. 1990 A study on home-based work in South Korea. Women’s Studies Forum
(Korean Women’s Development Institute): 45-145.
Saget C. 2001. Poverty reduction and decent work in developing countries: Do minimum
wages help? International Labour Review 140 (3): 237-69.
Samarasinghe V. 1998. The feminization of foreign currency earnings: Women’s labor in
Sri Lanka. Journal of Developing Areas 32: 303-326.
Sayeed A, Balakrishnan R. 2004. Why do firms disintegrate? Towards an understanding
of the firm level decision to sub-contract and its impact on labor. In Labor and the
Globalization of Production: Causes and Consequences of Industrial Upgrading,
Milberg W (ed). Palgrave MacMillan.
Seguino S. 2005. Is more mobility good?: Mobile capital and the low-wage lowproductivity trap. Structural Change and Economic Dynamics.
_____. 2004. Why are women in the Caribbean do much more likely than men to be
unemployed? Social and Economics Studies 52(4): 83-120.
_____. 2002. Gender, quality of life, and growth in Asia 1970 to 1990. The Pacific
Review 15 (2): 245-77.
_____. 2000a. The effects of structural change and economic liberalization on gender
wage differentials in South Korea and Taiwan. Cambridge Journal of Economics
24 (4): 437-59.
37
_____. 2000b. Gender inequality and economic growth: A cross-country analysis. World
Development 28 (7): 1211-30.
_____. 1999-2000. The investment function revisited: Disciplining capital in Korea.
Journal of Post-Keynesian Economics 22 (2): 313-38.
Sen A. 1999. Development as Freedom. Anchor Books, New York.
Setterfield M. 2003. Neo-Kaleckian growth dynamics and the state of long-run
expectations: Wage- versus profit-led growth. In Old and New Growth Theory,
Salvadori N (ed). Edward Elgar, Chelthanham, UK.
Singh A. 2000. Global economic trends and social development. Occasional Paper No. 9,
UNRISD.
Singh A, Zammit A. 2002. Gender effects of the financial crisis in South Korea. Paper
presented at New Directions in Research on Gender-Aware Macroeconomics and
International Economies: An International Symposium. Levy Economics Institute
of Bard College.
Sowerine J. 1999. New land rights and women’s access to medicinal plants in northern
Vietnam. In Women’s Rights to House and Land: China, Laos, and Vietnam,
Tinker I, Summerfield G (eds). Lynne Rienner Publishers, Boulder, CO.
Standing G. 1989. Global feminization through flexible labor. World Development 17 (7):
1077-95.
______. 1999. Global feminization revisited. World Development 27 (7): 583-602.
Stephen L. 2000. Sweet and sour grapes: The struggles of seasonal women workers in
Chile. In Women Farmers and Commercial Ventures: Increasing Food Security in
Developing Countries, Spring A(ed). L. Rienner Publishers, Boulder, CO.
Tanzi V. 1995. Taxation in an Integrating World. Brookings Institution, Washington,
DC.
Thrupp L, Bergeron, G, Waters W. 1995. Bittersweet Harvests for Global Supermarkets:
Challenges in Latin America’s Agricultural Export Boom. World Resources
Institute, Washington, DC.
Tzannatos Z. 1999. Women and labor market changes in the global economy: Growth
helps, inequalities hurt and public policy matters. World Development 27 (3):
551-69.
United Nations Development Programme (UNDP). 1997 Human Development Report
1997. Oxford University Press, New York.
38
_____. 1999. World Survey on the Role of Women in Development: Globalization,
Gender, and Work. Author, New York.
United Nations Research Institute for Social Development. 2005. Gender Equality:
Struggling for Justice in an Unequal World. Author, Geneva.
Wallerstein M, Przeworski A. 1995. Capital taxation with open borders. Review of
International Political Economy 2(3): 425-45.
Williams P. 1999. Trafficking in women and children: A market perspective. In Illegal
Immigration and Commercial Sex: The New Slave Trade, Williams P (ed). Frank
Cass, London.
Wink C, Klasen S. 2003. Missing women: Revisiting the debate. Feminist Economics 9
(2-3): 263-99.
World Bank. 2001. Engendering Development Through Gender Equality in Rights,
Resources, and Voice. Oxford University Press, New York.
You, JI. 1989. Capital-Labor Relations and Economic Development. Unpublished Ph.D.
Dissertation, Harvard University.
39
Notes
1
This paper does not deal directly with change in other arenas, especially the political. On the role of
greater equity in the distribution of material resources to promote gender equity, see Rae Lesser Blumberg
(1988). For further discussion of the notion of people-centered development, as this approach is frequently
called, see UNDP (1997) and Elson and Cagatay (2000).
2
In the case of self-employment, including on-farm employment, we imply the need for gender equity in
access and control over income.
3
Elson and Cagatay (2000) label this the ‘transformatory’ approach insofar as the goal of policy is to alter a
given set of gender relations and distribution of resources to promote greater equity.
4
It is useful to think of the nontradables as fix-price industries where goods are priced with a fixed mark-up
over unit costs due to oligopolistic structure and chronic excess capacity. The tradables sector is analogous
to a flex-price market, where prices are set with a flexible mark-up that responds to changes in the real
exchange rate. An important gender difference is that goods produced in the nontradables sector also have
lower price elasticity of demand than export goods, due to relatively fewer substitutes. As a result, wages in
these industries can rise without substantial negative effects on product demand or employment.
5
The feminization of labor in the manufacturing sector may be a developing country phenomenon. Kucera
and Milberg (2000), for example, find evidence of declines in female share of manufacturing employment
in a number of industrialized economies in response to increased north-south trade. That is, women
employed in the formal manufacturing sector in the north have been displaced in response to increased
trade with southern countries that are more intensively using women in labor-intensive industries.
6
It would be interesting to explore the process of defeminization and whether its rate has been slower in
some countries (i.e., South Korea) than in others. This has implications for trends in the gender wage gap.
7
Countries that export unprocessed primary products (e.g., ores) do not fit the stylized facts that we present
here. First, exports have not expanded as a share of GDP to the extent they have in other developing
economies. Also, these industries tend to be male-dominated, such that any expansion of output is likely to
benefit male workers in employment and wages (Fontana 2002). Liberalization has, however, had negative
effects on women’s employment and income in these economies, in part through loss of manufacturing
jobs, but also due to pressures on the state to reduce expenditures, resulting in a disproportionately large
loss of female jobs.
8
The sex trade is also one of the fastest growing and most profitable service industries; see Williams
(1999).
9
Moreover, unemployment data are of limited significance in low-income economies where the majority
of the population engages in some form of economic activity that tend not to be counted–usually informal
employment or self-employment.
10
For a description of unemployment measurement in several Caribbean economies, see Seguino (2004).
11
This occurs, despite the reliance on service exports to fuel growth in the region. Evidence indicates that
during economic upturns the gender gap in unemployment rates widens as men are hired first, suggesting
that capital’s preference for cheap labor is mitigated by patriarchal norms that give men first access to jobs
(Seguino 2004).
12
This phrase is from Samarasinghe (1998) in reference to trends in Sri Lanka. It is clearly, however, a
process that extends beyond Sri Lanka to many developing economies.
40
13
On this topic, see Fernandez-Kelly and Sassen (1993), Carr, Chen, and Tate (2000), Sayeed and
Balakrishnan (2002), and Balakrishnan (2002).
14
This bias results in women being treated as though their earnings are supplementary while men are
assumed to have the right to jobs whose pay is regular and where there is upward mobility.
15
In agriculture, health hazards associated with working with chemical pesticides further dampen the
positive employment effects (Dolan, Humphrey, and Harris-Pascal 1999; Thrupp, Bergeron, and Waters
1995). Some recent studies note that some progress has been made on labor conditions and on women’s
empowerment (Newman 2000; Stephen 2000). Nevertheless, work conditions are relatively harsh and
prospects for advancement are limited.
16
Oostendorp (2004) finds evidence of declining gaps in wages within occupational categories in tradables
industries, but not in nontradables, based on data from the ILO October survey, noting, however, the
extensive problems with this data set that makes it ‘one of the least-used sources of cross country data in
the world’ (2004: 5). These data weaknesses and the standardization procedure used to convert earnings to
monthly wages raise questions about the reliability of the results.
17
A second case of women’s increased earnings from, NTAEs is Vietnam. Trade liberalization and a
reduction in government subsidies for modern health care (Sowerine 1999) led to increased demand for
medicinal plants. This has had a positive effect on women’s income since they are dominant along the
chain of production of medicinal plants. Again, however, this partial equilibrium perspective is
overshadowed by broader evidence suggesting that gender inequality has increased in Vietnam (Long,
Hung, Truitt, Mai, and Anh 2000).
18
This result differs from industrialized economies such as the US where men have been concentrated in
import competing industries, such as autos and steel, and have also faced ‘threat effects’ of corporate
relocation. Since men were disproportionately employed in these industries, the result has been a narrowing
of the gender wage gap but in a gender conflictive sense, whereby men’s wages have fallen significantly
and women’s have risen slightly (Mishel and Bernstein 1999). Black and Brainerd (2002) attribute this to
increased trade competition which forces firms to give up their discriminatory hiring practices to employ
female labor, thus driving up women’s relative wages. Kongar (2004) contradicts this explanation, instead
attributing the narrowing gender wage gap in concentrated US industries to firms’ ability to extract wage
concessions from male workers, at the same time laying off female workers in low productivity
occupations, thus raising the average wage of remaining female workers. Import competition and the
decline of job opportunities for males thus resulted in a greater supply of males willing to work for lower
wages, thereby decreasing the cost of discrimination. These results imply a relative decline in female
manufacturing employment, a finding consistent with Kucera and Milberg (2000).
19
Some recent studies show, however, that when gender equality is measured in terms of education, equity
stimulates growth (Hill and King 1995; Klasen 2002; Dollar and Gatti 1999). The causal mechanisms are
several. Gender inequalities in education and access to other productive resources create inefficiencies.
Further, women’s greater education enhances household bargaining power that can improve children’s
access to resources, thus enhancing the quality of the future labor supply and economy-wide productivity.
These results are not necessarily inconsistent with Seguino (2000b) whose empirical analysis is focused on
the short- and medium-run. Increase in female education relative to men can raise their relative
productivity. But if women lack the bargaining power to translate that productivity into higher wages, unit
labor costs and thus export prices fall and./or firm profits rise. Employers and foreign buyers thus
appropriate gains in women’s education.
20
Conversely, horizontal FDI is motivated by the desire to gain access to a domestic market to avoid
import restrictions or local content requirements, or reduce transport costs. In such a case, labor costs have
a smaller negative effect on inward FDI.
41
21
Proponents of liberalization argue that efficiency is promoted as investment funds flow from surplus
economies, where marginal rates of return are low to economies with higher marginal productivity of
investment, thereby stimulating investment and growth worldwide. Felix (1998) challenges this view,
arguing that higher interest rates dampen investment and slow economic growth, and economic
inefficiency.
22
This occurs between countries and within countries, such as the United States where individual states
compete for investment by lowering corporate tax burdens.
23
Elson and Cagatay (2000) note also the trend to commodify state-based entitlements, with health,
retirement and education pushed into the market realm, available primarily to those whose incomes are
sufficient to cover the costs.
24
While agricultural and semi-industrialized economies differ structurally, there are some commonalities
related to their susceptibility to external factors, according to Erturk (2000-01). Semi-industrialized
economies are attempting ‘immiserizing growth’ which results from over-reliance on low-tech
manufacturing goods that have taken on the pricing characteristics of primary commodities—that is, with
declining terms of trade. The emergence of new producers of these homogenous goods had led to a crisis of
overproduction, causing export prices to fall. This has led to competitive devaluations and pressured firms
to lower costs or relocate to lower wage sites.
25
These unpaid labor burdens are costly in terms of foregone income. For example, in Tanzania, a
reduction of women’s time burdens in providing basic commodities to their households was found to raise
cash incomes 10 percent, labor productivity 15 percent, and capital efficiency 44 percent on smallholder
farms (Blackden and Bhanu 1999).
26
27
28
For empirical evidence consistent with this phenomenon, see Seguino (2005).
We are grateful to Nilufer Cagatay for this point.
See Blecker (2002) and Setterfield (2003) for excellent reviews of research in this area.
29
Evidence of a positive relationship between wages and investment can be found in a variety of contexts.
See, for example, Seguino (1999-2000) on South Korea, and Marquetti (2004) for a variety of
industrialized countries.
30
If unit labor costs stay the same, of course, then this is not a case of wage-led growth in the classic
demand-driven sense. But it is wage-led in the supply-side sense, whereby higher wages stimulate
productivity improvements, attenuating any negative demand side effects that might result from a decline in
profits.
31
For further discussion of this strategy and the theory behind it, see Amsden (1998).
32
There are constraints on the effectiveness of exchange rates to lead to a closure of the gender wage gap,
however. Currency devaluations can be inflationary in economies in which imports are rigid and are a large
share of GDP. This can dampen export demand, and will lower women’s real wages. Further, financial
markets may respond negatively to anticipated inflation in response to a currency devaluation, leading to
rising interest rates, bankruptcy, and deflation. Thus women may gain in terms of higher wages relative to
men, but they may also suffer employment losses so that the female share of the wage bill falls. Also,
unless supply schedules are elastic, it may be difficult to shift resources to the export sector. For more on
the limits of devaluation to promote output growth, see, for example, Panic (1998).
33
Higher minimum wages may be beneficial, even in open export-oriented economies (Rama, 2001; Saget
2001). Rama (2001) found, for example, that a doubling of the nominal minimum wage in Indonesia in the
42
early 1990s resulted in some negative effects on employment. While large firms saw employment rise,
small and medium firms experienced declines in employment, which may be a result of their inability to
respond to higher wages with productivity-increasing measures.
34
Many would agree that a shift in the IMF policy framework is also required to permit developing
countries to manage financial capital flows, thus allowing domestic interest rates to fall. In addition, an end
to the IMF’s push for contractionary policies in response to balance of payments crises as a way to slow
imports is needed. Further, the emergence of an international lender of last resort in times of balance of
payments crises would reduce pressures on domestic economies to maintain high levels of reserves and
interest rates that slow growth. These stances have been broadly discussed, but the engine of change in this
case seems to rest more on political power than economic analysis.
43